Rocky's Moon Shot

"If we can put a man on the moon, why can't we . . .?" That cliche was invoked two years ago by Richard Nixon in promising an effort (Project Independence) to free the U.S. from reliance on foreign oil. Last week Gerald Ford finally produced an energy-development plan comparable to the moon program in size and scope--and also in controversy. In a San Francisco speech before a cheering AFL-CIO audience, the President pledged to send Congress a bill to create an Energy Independence Authority that over the next ten years would pump as much as $100 billion into the development of non-oil sources of energy, primarily by making or guaranteeing loans to private companies. The probably overambitious goal: to spur such a growth of nuclear, geothermal, solar and other types of power that the U.S. will eventually need to buy no foreign oil at all.

The idea came from Vice President Nelson Rockefeller. Its acceptance by the White House may indicate that he is acquiring far more clout within the Administration than has been shown before. Rocky sold the plan to Ford over the vehement opposition of almost every economic policymaker in the Government--notably Council of Economic Advisers Chairman Alan Greenspan, Treasury Secretary William Simon and Budget Boss James Lynn. Greenspan went so far as to contend in an intra-Administration memo that the energy agency could become a vehicle for "real or perceived corrupt practices"--presumably because it might make generous loans to companies headed by executive friends of the White House.

The central argument for the agency is that the Government must make sure money is available to finance development of new sources of energy. The private market might not supply enough because such projects tend to take a long tune to become profitable. Critics retort that most of the money would go to oil companies and that the oil giants have no trouble raising cash without Government help. The White House has been vague on exactly who would get EIA largesse; it insists that the loans would go to neither the oil titans nor small wildcat operations founded by hotshot entrepreneurs, but to "substantial" corporations. Some oil companies are uneasy about the plan. Jack Bennett, an Exxon senior vice president and former Treasury Under Secretary, feels the EIA simply "throws money at the problem."

Treasury Advances. Another brouhaha concerns the way EIA would be financed. Its outlays would not directly swell the federal budget deficit; the agency would get some of its money (how much is unclear) by selling bonds to the public and the rest from the Treasury, but the Treasury advances would not count as budget expenditures. The rationale is that the EIA's loans would be repaid--or perhaps sold to private investors who would get federal guarantees against default--so that the Government would get its money back. Off-budget financing is disliked by conservatives, who view it as simply a way of hiding big spending.

Critics also argue that the EIA would thrust heavy new demands into capital markets, either by borrowing or by having the Treasury borrow for it, thus crowding out private borrowers and fanning inflation by pushing up interest rates. Republican Banker Beryl Sprinkel, a member of TIME'S Board of Economists, adds that the Government should let the free market decide which energy-development projects are worth financing and which are not.

The plan will have some support in Congress: many Democrats have called for a crash program to develop alternate sources of energy. Presidential Hopeful Henry Jackson of Washington State last week needled Ford by congratulating him on having abandoned the idea that reliance on the free market is the solution of all energy problems. But the plan also faces stiff opposition, and not only from conservatives. Environmentalists fear it will lead to a great expansion of nuclear power, and many Democrats are angered at the thought of giving oil companies the loan guarantees that the Administration has denied to financially pressed cities.

This file is automatically generated by a robot program, so viewer discretion is required.